GMAC survey reveals low consumer knowledge about credit ratingsMortgagePress.comCredit rating information
According to the recent GMAC Mortgage Second Quarter Consumer
Survey, U.S. consumers lack important knowledge about credit
scores. The survey revealed that the majority of consumers do not
fully understand the importance of a credit score, how that score
is determined and, most importantly, the steps they can take to
improve credit scores.
The survey polled more than 1,000 consumers nationwide on the
impact of credit on the entire home financing process. Key findings
include the following:
†Sixty-two percent of respondents did not know that a
score above 620 out of 850 is necessary to secure the most
favorable mortgage rate.
†More than 50 percent of respondents incorrectly answered
that increased income level would raise their credit score.
†Only 42 percent knew that payment history was a critical
determinant to a credit score.
†Sixty-four percent of respondents would check their credit
only six months before purchasing a home.
"Potential homebuyers should not view credit ratings as the last
step in the home financing process," said Paul Fein, senior vice
president and Southeast divisional manager for GMAC Mortgage.
"Credit scores are essential to the mortgage lending process, and
it's important that homebuyers start evaluating their credit scores
early in the process, so they can get above the 620 mark before
their formal application is processed. We are encouraged to see
that 92 percent of consumers polled are taking some action to
improve their credit; however consumers must be educated on what
actions will and will not affect their ability to secure home
financing."
As noted by the national credit rating agencies, an individual's
credit rating is attained by calculating and evaluating several
factors, including payment history during the last two to three
years, amount of debt outstanding and available lines of credit,
length of credit history, new lines of credit and types of credit
used. However, other factors, such as the number of accounts with
outstanding balances, proportion of credit used, length of account
activity and number of recent credit inquiries also play a
significant role.
GMAC Mortgage and CARAVAN Opinion Research Corporation conducted
a national telephone survey of 1,057 households nationwide between
May 13 and May 16. For a sample of 1,000, the margin is plus or
minus three percentage points at the 95 percent confidence
level.
For more information, visit www.gmacmortgage.com.
